National State Bank, Elizabeth, N. J. v. Long, No. 79-1823

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtBefore GIBBONS, WEIS and SLOVITER; WEIS
Citation630 F.2d 981,57 A.L.R. Fed. 308
Decision Date17 September 1980
Docket NumberNo. 79-1823,Nos. 79-1823,No. 79-1824,79-1824
PartiesThe NATIONAL STATE BANK, ELIZABETH, N. J., a Banking Corporation of the United States of America, and New Jersey Bank (National Association), a Banking Corporation of the United States of America, Appellants at, v. Virginia LONG, Commissioner, Department of Banking, State of New Jersey, Appellant at

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630 F.2d 981
57 A.L.R.Fed. 308
The NATIONAL STATE BANK, ELIZABETH, N. J., a Banking
Corporation of the United States of America, and New Jersey
Bank (National Association), a Banking Corporation of the
United States of America, Appellants at No. 79-1823,
v.
Virginia LONG, Commissioner, Department of Banking, State of
New Jersey, Appellant at No. 79-1824.
Nos. 79-1823, 79-1824.
United States Court of Appeals,
Third Circuit.
Argued June 10, 1980.
Decided Sept. 17, 1980.

Page 982

Alfred J. Lechner, Jr. (argued), Mackenzie, Welt, Duane & Lechner, Elizabeth, N. J., for The National State Bank, Elizabeth, N. J. and New Jersey Bank (National Association).

Mark S. Rattner (argued), Deputy Atty. Gen., John J. Degnan, Atty. Gen., Michael E. Goldman, Deputy Atty. Gen., Stephen Skillman, Asst. Atty. Gen., State of New Jersey, Trenton, N. J., for Commissioner of Banking, State of New Jersey.

Before GIBBONS, WEIS and SLOVITER, Circuit Judges.

OPINION OF THE COURT

WEIS, Circuit Judge.

"Redlining"-discrimination in the granting of home mortgages-is a matter of concern to both national and state government. This appeal presents the question whether national banks are subject to the provisions of a state antiredlining statute when federal legislation has covered some, but not all, of the field. The district court determined that insofar as a New Jersey statute required disclosure of mortgage statistics, it was preempted by the federal Home Mortgage Disclosure Act of 1975, 12 U.S.C. §§ 2801-2809 (1976). However the court also found that since federal legislation did not explicitly prohibit redlining, the antidiscrimination provision of the state statute was effective and could be enforced against national banks by state officials. We agree with the district court's determinations, except we hold that enforcement of the state statute is the responsibility of federal officials. With that modification, we affirm.

I

In 1977 the New Jersey legislature enacted a statute, N.J.Stat.Ann. §§ 17:16F-1 to -11 (West Cum.Supp.1980), which (1) prohibits geographic discrimination, on an arbitrary or lending risk basis unsupported by

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reliable analysis, in granting, denying, or setting the terms of mortgages, id. § 17:16F-3; (2) requires depository institutions to compile and disclose to the public statistical information covering, among other items, the number and amount of mortgages originated or purchased annually and the locations of the properties, id. §§ 17:16F-4 to -6; (3) establishes a private right-of-action against institutions discriminating in violation of the Act, id. § 17:16F-7; (4) empowers the Commissioner, Department of Banking of New Jersey, to investigate, hold hearings, and issue subpoenas and cease and desist orders, id. §§ 17:16F-8 & -9; (5) authorizes the imposition of penalties for noncompliance, id. § 17:16F-10; and (6) provides that the Commissioner may adopt enforcement regulations consistent with the Act, id. § 17:16F-11.

The statute was designed to prohibit the arbitrary denial of mortgage loans on the basis of property location, to encourage the availability of mortgage capital for neighborhoods generally denied it, and to provide state officials with the information necessary to assess the statute's effectiveness. Id. § 17:16F-1. The legislation focused on the practice of restricting loans secured by mortgages on property in older or deteriorating areas; in the vernacular, "redlining"-marking off certain areas where mortgages will be given, if at all, only on more onerous terms. 1

In 1977 the Commissioner adopted implementing regulations and notified all depository institutions doing business in the state, including national banks, of her intention to enforce them vigorously. The plaintiffs, National State Bank of Elizabeth, New Jersey and New Jersey Bank (National Association), sought declaratory and injunctive relief against the Commissioner, asserting that the New Jersey statute and regulations were unconstitutional. On cross motions for summary judgment, the United States District Court for the District of New Jersey held that the provisions of the statute prohibiting redlining were constitutional, but that the sections requiring banks to compile and disclose information, as well as those empowering the Commissioner to compel the production of other evidence, were preempted by the Home Mortgage Disclosure Act, insofar as the state sought to apply them to national banks. National State Bank v. Long, 469 F.Supp. 1068 (D.N.J.1979). 2

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II

Congress enacted the Home Mortgage Disclosure Act in 1975 for the purpose of compiling information to determine whether depository institutions were "filling their obligations to serve the housing needs of the communities and neighborhoods in which they are located." 12 U.S.C. § 2801(b). 3 The information gathered also would assist public officials in distributing public sector investments so as to improve the private investment environment. Id. The Act authorized enforcement against national banks by the Comptroller of the Currency. Id. § 2804(b)(1)(A). Similar responsibility for the regulation of federal savings and loan institutions was given to the Federal Home Loan Bank Board. Id. § 2804(b)(2). The Act also provided that a state chartered depository institution could be exempted if state law imposed substantially similar requirements. Id. § 2805(b). Institutions in New Jersey were granted such an exemption.

Two other federal statutes, the Community Reinvestment Act of 1977, 12 U.S.C. §§ 2901-2905 (Supp. III 1979), and the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f (1976), also were asserted to be relevant-the plaintiffs invoking the former, the defendant the latter. The Community Reinvestment Act requires the appropriate federal supervisory agency to assess an institution's record of meeting the credit needs of the entire community, including low and moderate income neighborhoods, 12 U.S.C. § 2903(1), and simultaneously to encourage the institution to do so, id. § 2901(b).

The federal agencies, including the Comptroller of the Currency, have adopted regulations implementing the Act. See Note, The Community Reinvestment Act Regulations: Another Attempt To Control Redlining, 28 Cath.U.L.Rev. 635, 638-39 (1979). With the information required by these regulations, the Comptroller may, but need not, deny an application for a deposit facility to a national bank that fails to meet the needs of its local community. 12 U.S.C. § 2903; see 12 C.F.R. § 25.8 (1980).

Like the Home Mortgage Disclosure Act and the Community Reinvestment Act, the Equal Credit Opportunity Act does not expressly prohibit redlining but bans discrimination based on race, color, religion, national origin, sex, marital status, age, the fact that the applicant's income is derived from public assistance, or the good faith exercise of any right thereunder. 15 U.S.C. § 1691(a). A private right-of-action is granted, id. § 1691e, and, if the same act or omission constitutes a violation of state law as well, the aggrieved party must elect to proceed under either federal or state law, id. § 1691d(e). The Equal Credit Opportunity Act, therefore, is an example of a situation where federal and state regulation co-exist. See id. § 1691d(f).

On appeal the plaintiffs also rely on the National Neighborhood Policy Act, 42 U.S.C. § 1441 (Supp. II 1978), and § 202(a) of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. § 57a(f) (1976 & Supp. III 1979). 4 The National Neighborhood Policy Act created the National Commission on Neighborhoods to investigate and study the factors contributing to the decline of city neighborhoods

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and the factors necessary to neighborhood survival and revitalization. Pub.L.No.95-24, § 204(a), 91 Stat. 57. The Commission fulfilled its responsibility to compile and submit a report to the Congress and the President, id. § 204(c), 91 Stat. 58, and, having done so, ceased to exist, id. § 208, 91 Stat. 59.

Pursuant to § 202(a) of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, the Comptroller of the Currency has established a Division of Consumer Affairs empowered to investigate and resolve consumer complaints about unfair or deceptive acts or practices by banks.

The plaintiffs assert that these statutes demonstrate Congress's intent to preempt all state redlining legislation insofar as national banks are concerned, and, therefore, the supremacy clause, U.S.Const. art. VI, cl. 2, invalidates the state's attempt to regulate them in any respect.

III

In some instances, for example, regulation of the currency, congressional power to legislate in a given field is exclusive, and the states are prohibited from interfering. U.S.Const. art. I, §§ 8, cl. 5; 10, cl. 1. Usually, however, application of the supremacy clause to preemption questions depends upon congressional intent. Congress may choose to legislate, in areas within its competence, even though it treads upon matters already regulated by a state. Having chosen to act, Congress may decide to take over the entire field or perhaps only part. In some instances, federal legislation deliberately may overlap and even duplicate state enactments without supplanting them.

When congressional sentiment is not stated, the courts divine intent from available evidence. Federal legislation does not preempt a field traditionally within the state's police power unless that is the clear and manifest purpose of Congress. Rice v. Sante Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed.2d 1447 (1947). That purpose may be found if federal regulation is so pervasive there is no room for the state to supplement it. In other instances, federal law may touch a field in which the national interest is so dominant or the object sought and the obligations imposed are such that state enforcement on the same subject is assumed to be precluded. It...

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    ...field they usually denominate the inquiry as a search for congressional intent to preclude state law. National State Bank v. Long, 630 F.2d 981, 985 (3d Cir. We must infer that Congress intended to preclude state regulations when: (1) the pervasiveness of the federal regulations in a partic......
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  • Perdue v. Crocker National Bank, S.F. 24591
    • United States
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    ...Model of Competition in Regulation (1977) 30 Stan.L.Rev. 1.) 28 As explained in National State Bank, Elizabeth, N.J. v. Long (3d Cir.1980) 630 F.2d 981, "[w]hatever may be the history of federal-state relations in other fields, regulation of banking has been one of dual control since the pa......
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